Top 5 Markets for Transaction Activity

The five metros on this list accounted for more than 25 percent of the nation’s sales volume over the first three quarters.

Nationwide, more than 300,000 units changed hands year-to-date through September for a combined total of $47.5 billion, according to Yardi Matrix data. That’s a 45 percent nosedive compared to the similar period last year. The downward trend also applied to the total number of units sold, which declined 47 percent from last year, to almost 304,000.

However, the five metros on this list accounted for more than a quarter of the nation’s sales volume, in a sign that investment appetite switched back to more stable major multifamily markets. But looking at individual deals, it’s clear that investors focused increasingly on value-add opportunities, with the bulk of sales remaining below the $100 million threshold even in these markets.

5. Denver

Image by 12019 via

Image by 12019 via

Denver has been experiencing a development boom over the better part of the last decade, thanks to a robust job market. But as the health crisis hit the metro, the impact was apparent. The metro lost more than 100,000 jobs in the 12 months ending in July, the bulk of which were in the leisure and hospitality and government sectors, which combined for a loss of 63,100 positions. Although the state’s stay-at-home order designated housing construction as essential, the employment sector lost 11,300 positions during the same period. Overall, losses ranged from 0.3 percent for professional and business services jobs to 16.7 percent for tourism-related positions.

Denver’s transaction volume dropped 31 percent year-to-date through September compared to the similar period last year, to almost $2.4 billion. That’s the smallest contraction of the five metros on this list. Investors acquired a combined total of 10,240 units, down by a little over a quarter. Harbor Group International acquired eight communities from Aragon Holdings for more than $500 million, as part of their $1.85 billion, multistate deal. In the metro, the transaction included 2,501 units situated in Denver, Aurora, Thornton, Arvada and Broomfield, Colo.

4. Dallas

Dallas strengthened its office-using job market in recent years, which contributed to its outstanding demographic growth, but also made it more resilient in the face of ongoing economic volatility. In total, the metro’s employment market contracted by almost 85,000 positions in the 12 months ending in July. However, financial activities—which increased rapidly in 2019—and construction jobs weathered the storm better than the two most-impacted sectors. Leisure and hospitality, and education and health services positions accounted for more than 90 percent of the jobs lost in Dallas, at a combined total of 77,400.

Transaction activity over the first nine months totaled $2.4 billion, down 44 percent compared to the similar period of last year. Meanwhile, the number of units sold dropped by 51 percent, to 18,474. The metro’s largest multifamily deal this year so far is Casoro Group’s acquisition of five properties from Atlas Residential. The 1,070-apartment portfolio changed hands for $137.8 million. The communities in the deals were located in Dallas, Desoto, Wylie and Garland, Texas. And in separate transactions, Ashcroft Capital purchased 884 units in the metro, paying a total of $132 million for the Irving and Arlington communities.

3. Atlanta

Image by user ericstokley via Wikimedia Commons

Image by user ericstokley via Wikimedia Commons

Like most of the country, Atlanta’s economy was not immune to the effects of the ongoing health crisis. The metro had enjoyed the fruits of a diversified economy, with above-average employment, demographics and rent growth. But in the 12 months ending in July, metro Atlanta lost some 130,000 jobs. The leisure and hospitality sector contracted by 16.3 percent, losing more than 50,000 positions, followed by information jobs, which shrank by 9.6 percent. And while the jobless rate hit a record 12.7 percent in April, it had quickly dropped 410 basis points by July. The average rent increased 1 percent year-over-year through September, to $1,325.

Investors closed deals totaling $2.5 billion in Atlanta during the first three quarters of the year, down 54 percent from the same period of 2019. The number of units sold also contracted by more than half, from 45,417 to 18,200. In two separate deals with Wilkinson Corp. and RADCO Cos., Greystar purchased four communities totaling 1,191 units. The firm paid a combined $190.8 million for the assets in Duluth, Kennesaw and Acworth, Ga. The RADCO deal included seven communities sold to Greystar, Advenir Real Estate and Lion Real Estate Group for $315.5 million.

2. Phoenix

Phoenix has a track record of robust employment and rent growth, coupled with increased demand for new multifamily supply, especially in recent years. While the unemployment rate declined from April to May, it continued to increase afterwards, hitting 10.4 percent in July, among the lowest in the country. In the 12 months ending in July, Phoenix lost 81,500 positions, more than half of which were in tourism-related industries. The leisure and hospitality sector contracted by 21 percent, while trade, transportation and utilities added 7,600 positions, a 1.9 percent increase. And compared to the other metros on this list, the average rent in Phoenix went up 3.1 percent year-over-year through September, to $1,227.

The metro’s year-to-date sales volume through September decreased 52 percent compared to the similar period of last year, to $2.7 billion. A combined total of 15,672 units changed hands during the first nine months of 2020. In a $152.6 million deal with Christopher Todd Properties, Inland Real Estate Group bought four communities in Litchfield Park, Surprise and Tolleson, Ariz. The 630-apartment portfolio sale was subject to a $96.8 million loan from NorthMarq Capital. Last year, the buyer expanded its Phoenix footprint with the acquisition of a 225-unit asset from NexMetro Communities.

1. Washington, D.C.

Washington, D.C. Image via Pixabay

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Washington, D.C., has had a more resilient economy in the face of ongoing economic volatility, thanks in part to its robust public sector. But D.C.’s leisure and hospitality sector took a dramatic hit, contracting by more than 30 percent in the 12 months ending in July, losing 104,200 position. The sector accounted for more than half of the total 202,600 jobs lost in the metro. And while its unemployment rate reached 10 percent in April, as a result of the city’s stay-at-home order, it declined to 8.1 percent by July. However, the average rent was down 2.2 percent year-over-year through September, to $1,810.

Investment activity was solid over the first three quarters of 2020, when 10,575 units sold for a total of $2.8 billion. The transaction volume is down 36 percent compared to the similar period of last year. Dweck Properties grew its portfolio with the acquisition of the 525-unit Willard Towers in the metro’s Chevy Chase/Potomac submarket. The company paid $276.5 million to Equity Residential. And in the East Cleveland Park/Woodley Park submarket, Nuveen sold a 212-unit community to GID. The $180.3 million deal closed with the help of a $90.1 million loan from Fidelity National Financial.

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